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Financial Literacy Unit Assessment Review
Test Description: Financial Literacy Review
Instructions: Answer all questions to get your test result.
1) Why is it important to have an emergency fund?
A
The fund is used to pay for your health and car insurance, where emergencies are common.
B
The fund is used to make donations to charities, who need your help to do good work.
C
The fund is used to pay for unexpected expenses, so that you don't have to go into debt if there's an emergency.
D
The fund is used to pay for college so you don't have to take out student loans.
2) You want to reduce the amount of loans you'll need to take out for college, so you want to save as much money as you can ahead of time. What's the BEST strategy?
A
Every time you receive a paycheck, spend carefully and then save any money you have left over at the end of the month.
B
Don't do anything fun during high school so you're not tempted to spend money.
C
Spend whatever you want during the first 2 years of high school, but then save everything you earn during the last 2 years of
D
When you receive any income, either through gifts, allowance, or working, set a goal of saving at least half before you spend
3) Jodi wants to visit her extended family in Barbados next summer, and the flight costs $450. How much does she need to save each month if she wants to buy the flight in exactly 9 months?
A
$90
B
$50
C
$9
D
$45
4) A credit score is...
A
A record that goes onto your high school transcript
B
Used to tell future lenders how responsible you are with debt
C
The way you know if you are making a good investment
D
Assigned to everyone when they first open a bank account
5) If you have a $1000 balance on your credit card statement, which sentence below is TRUE?
A
You will not need to repay that money until after you graduate from college.
B
You need to make at least the minimum payment each month until the entire debt is paid off.
C
Your credit card company will take the entire $1000 from your savings account to pay that bill.
D
You have already paid that $1000, and you don't owe any additional money.
6) Yao is trying to open a credit card. He finds a Visa with an interest rate of 14.99%. His other option is a Mastercard with an interest rate of 22.99%. Based only on interest rate, which card should he choose?
A
The Mastercard, because if he is charged interest for carrying a balance, it will be lower.
B
The Mastercard, because a high interest rate will lead to a high credit score.
C
The Visa, because if he is charged interest for carrying a balance, it will be lower.
D
The Visa, because a low interest rate will lead to a high credit score.
7) Which statement best describes what a budget is?
A
A statement from your bank that shows your ATM withdrawals
B
A list for which scholarship and grants you will use to pay for college
C
A list of all the money you spent during the last month
D
A plan for how much income you expect to have and how you want to save and spend it
8) Susan's paycheck this month says her gross pay was $400 and net pay was $350. What's the best explanation for why those two numbers are different?
A
Susan didn't work as many hours as she promised she would.
B
Susan spent some of the money before she even got her check.
C
Susan's employer deducted taxes from her paycheck.
D
Susan's boss wasn't pleased with her work and reduced her pay.
9) Lamar recently graduated and lives in an apartment he shares with two friends. Each of these expenses is probably a NEED in Lamar's budget EXCEPT...
A
Paying $600 for his monthly rent
B
Making his cell phone payment on time so his service isn't shut off
C
Going out every Friday to celebrate Roommate Fun Night with his friends
D
Paying his portion of the electric bill
10) Which action would REDUCE the amount of money in Kendra's checking account today?
A
Using an ATM to deposit a check from her employer
B
Using a gift card she received for her birthday at her favorite store
C
Using an ATM to withdraw money using her debit card
D
Using her smartphone to deposit a check from her employer
11) What is compound interest?
A
Compound interest is the amount of interest you are charged on your bank account balance each month.
B
Compound interest is earning interest on the original amount you deposited.
C
Compound interest is earning a specific dollar amount on your bank account balance each month.
D
Compound interest is earning interest on the original amount you deposited plus any interest earned.
12) What are the two main categories of a budget?
A
Investments and Insurance
B
Spending and Saving
C
Income and Expenses
D
Taxes and Debt
13) Marbella just got her first job working part-time at a department store on weekends. Before receiving her first check, her aunt says, Be sure to pay yourself first! What does that mean?
A
Marbella should pick up her check first thing in the morning, right when banks open.
B
Marbella should ask her boss for a raise, so that her paycheck is higher.
C
Marbella should make sure she buys everything she needs, personally, before shopping for others.
D
Marbella should save part of her paycheck first, before she buys anything with the money.
14) Kellen is saving for a new video game system, which costs $300. He receives an allowance of $30 per month, and he usually spends $15 and saves $15 each time. How many months will it be until Kellen has enough saved to buy the game system?
A
20 months
B
12 months
C
30 months
D
10 months
15) Which of these is a key benefit of having a high credit score?
A
You will have more money in your checking and savings accounts.
B
You will have an easier time getting into a good college.
C
You will qualify for better rates on loans or credit cards.
D
You will earn more money from your employer.
16) Ronny uses his credit card to buy new bluetooth headphones at Audio Stop in a shopping plaza near his house. Where will the money come from for this purchase?
A
Ronny will take the money out of an ATM and repay Audio Stop before they close for the day.
B
The money will come out of Ronny's savings account at the end of the month and be sent to Audio Stop.
C
The money will come straight from Ronny's checking account and go to Audio Stop's account.
D
Ronny's credit card company will pay Audio Stop, and then Ronny will repay the credit card company later.
17) If you are trying to get a loan to pay for a used car, what type of interest rate should you be looking for?
A
You want a low interest rate so the total you pay is less.
B
You want compound interest, so that the value of the car grows quickly.
C
You want a high interest rate so you can afford a fancier car.
D
You want a high interest rate so the total you pay is less.
18) If you have a part-time job as a high school student, what would be the MOST common deduction from your paycheck?
A
Insurance premiums
B
You would be too young for deductions
C
Taxes
D
Retirement savings
19) Lana wants to create a better plan for her money so she knows exactly how much income she is making and how much is being spent on monthly expenses. What tool would you encourage her to use to achieve this goal?
A
A checking account
B
A credit card
C
A budget
D
An insurance policy
20) Who pays taxes?
A
Only people over the age of 18 that make at least $50,000 a year
B
Everyone over the age of 18
C
Only people over the age of 21, regardless of earned income
D
Any individual or company that earns income
*select an answer for all questions
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